Skip to content

Credits

← Invoice Management

In accounting, a credit is an entry that increases a liability account or decreases an asset account.

Understanding Credit

A business may owe money to a supplier or reduce the amount that a buyer must pay. Consequently, it records these events as credits.

Think of a marketplace scenario: You sell products that are delivered by a participating organization. You receive the customer's money, but you have to pay out the fulfiller. Other examples for credits include (manual) refunds or overpayments.

The written evidence of such an event is typically called a "credit note" or "credit memo", or short credit.

Note

Be aware that in some jurisdictions (including Germany), credits and cancellations have different legal foundations and taxation effects, and must therefore be applied properly. For details on possible use cases, see Invoice Correction.

Credits in JustOn

Credits, put simply, are invoices with a negative amount – statements about money you have to pay to someone else. To issue a credit, you create a new invoice with a negative payment amount. There are two ways to do so:

  • Manually creating a new invoice that contains invoice line items that yield a negative invoice balance, or
  • Creating a (partial) credit for an existing invoice (in the status Open or Paid) you want to reverse – this option lets you select the corresponding items and payments to be done.

Credit Status

As invoices do, credits have different statuses according to the business requirements.

  • Draft: Like usual invoices, new credits have the status Draft.
  • Open: After finalization, a credit becomes Open and due to be settled.
  • Settled: Once the corresponding payments are refunded or you have generated a new invoice that outweighs the credit amount for the account, the credit is set Settled.

Partial Credit Handling

You can issue a (partial) credit if you want to withdraw one or more individual invoice line items from an invoice. This way, you reduce the original invoice amount, cutting your customer's debt.

alt text
Withdrawing an invoice line item, issuing a partial credit

For details on issuing (partial) credits, see Creating Credits.

The following examples illustrate JustOn's behavior when handling partial credits in different use cases.

Credit complete invoice amount, with no payment received

Credit the complete invoice amount of an open invoice. No payment has been made yet.

Invoice Partial Credit
Grand Total 100,00 -100,00
Balance before credit finalization 100,00 -100,00
Status before credit finalization Open Draft
Final Balance 0,00 0,00
Final Status Paid Settled
Invoice Balances Credit Balances
100,00€ (Invoice) -100,00€ (Credit)
-100,00€ (Clearing) 100,00€ (Clearing)
Exported Balance - -
Credit complete invoice amount, with a 40% partial payment received

Credit the complete invoice amount of an open invoice. A partial payment of 40,00€ has been made.

Invoice Partial Credit
Grand Total 100,00 -100,00
Balance before credit finalization 60,00 -100,00
Status before credit finalization Open Draft
Final Balance 0,00 -40,00
Final Status Paid Open
Invoice Balances Credit Balances
100,00€ (Invoice) -100,00€ (Credit)
-60,00€ (Clearing) 60,00€ (Clearing)
-40,00 (Payment)
Exported Balance - -40,00€
Credit complete invoice amount, with a complete payment received

Credit the complete invoice amount of paid invoice. A complete payment of 100,00€ has been made.

Invoice Partial Credit
Grand Total 100,00 -100,00
Balance before credit finalization 0,00 -100,00
Status before credit finalization Paid Draft
Final Balance 0,00 -100,00
Final Status Paid Open
Invoice Balances Credit Balances
100,00€ (Invoice) -100,00€ (Credit)
-100,00€ (Payment)
Exported Balance - -100,00€
Credit 40% of the invoice amount, with a 40% partial payment received

Credit 40,00€ of an open invoice (100,00€). A payment of 40,00€ has been made.

Invoice Partial Credit
Grand Total 100,00 -40,00
Balance before credit finalization 60,00 -40,00
Status before credit finalization Open Draft
Final Balance 20,00 0,00
Final Status Open Settled
Invoice Balances Credit Balances
100,00€ (Invoice) -40,00€ (Credit)
-40,00€ (Clearing) 40,00€ (Clearing)
-40,00€ (Payment)
Exported Balance 20,00€ -
Credit 60% of the invoice amount, with a 60% partial payment received

Credit 60,00€ of an open invoice (100,00€). A payment of 60,00€ has been made.

Invoice Partial Credit
Grand Total 100,00 -60,00
Balance before credit finalization 40,00 -60,00
Status before credit finalization Open Draft
Final Balance 0,00 -20,00
Final Status Paid Open
Invoice Balances Credit Balances
100,00€ (Invoice) -60,00€ (Credit)
-40,00€ (Clearing) 40,00€ (Clearing)
-60,00€ (Payment)
Exported Balance - -20,00€

Credit and Refund Workflows

The following sections illustrate likely business use cases that combine credit creation with payment refunds. The examples outline the involved steps and show their key results.

Refunding a payment without creating a credit

(1) Finalize invoice

(2) Register payment

(3) Refund payment

refund_uc1
Refunding a registered payment

For additional examples of complete or partial refunds, see Refund Handling Examples.

Refunding a payment with a credit issued before payment receipt

(1) Finalize invoice

(2) Create (partial) credit

(3) Register payment

(4) Refund payment

refund_uc1a
Refunding a registered payment for a partially cleared (reduced) invoice amount

Refunding a payment with a credit issued after payment receipt

(1) Finalize invoice

(2) Register payment

(3) Create (partial) credit

(4) Refund credited amount

(5) Finalize credit

  • Individually from the detail view: Requires manual settlement with the refund balance using the function Register Payment
  • Via batch process from the list view: JustOn automatically assigns the refund balance upon finalization

refund_uc2
Refunding a registered payment after creating a (partial) credit

Refunding a payment with a credit issued after refund

(1) Finalize invoice

(2) Register payment

(3) (Partially) refund payment

(4) Create (partial) credit

(5) Finalize credit

  • Individually from the detail view: Requires manual settlement with the refund balance using the function Register Payment
  • Via batch process from the list view: JustOn automatically assigns the refund balance upon finalization

refund_uc3
Refunding a registered payment before creating a (partial) credit